UK High Court rules against Stagecoach over bidding disqualification

18 June 2020 (Last Updated June 18th, 2020 15:18)

The UK High Court has ruled against Stagecoach after it initiated legal action against the UK Government.

The UK High Court has ruled against Stagecoach after it initiated legal action against the UK Government.

In May last year, the company commenced legal action against the UK’s Department for Transport (DfT) after it was disqualified from bidding for the East Midlands rail franchise.

The government barred the transport group from placing bids on three franchises for not meeting pension requirements.

The Financial Times quoted that the issue was due to the pension liability change that the UK Government wanted the winning bidder to adopt related to the £28bn defined benefit Railways Pension Scheme that is in place for around 340,000 retired and active railway staff.

Stagecoach was supported by West Coast Trains Partnership, which is operated by Virgin Group and SNCF.

On 17 June, Justice Stuart-Smith gave his ruling remotely and stated that the decision of the previous Secretary of State for Transport Chris Grayling was lawful.

Stuart-Smith said that ‘non-compliances on pensions were considered as being sufficiently serious to merit disqualification from the competitions due to the level of risk on pensions which those bidders sought to transfer back’.

In April, Stagecoach sought clarification from the DfT over its disqualification from bidding on rail franchises.

Rail Delivery Group Policy director John Thomas said: “The priority for rail companies right now is to continue to support communities and businesses through the coronavirus pandemic.

“Today’s judgment on previous franchise bids has been accepted by both parties and the industry wants to work with government to ensure a reformed railway, which we have been calling for, can harness the best of both the public and private sectors so that we can deliver for Britain.

“We continue to work with the Pensions Regulator, DfT and the unions with a view to agreeing on a sustainable pensions framework for the train operator sections of the Railway Pensions Scheme.”